Executive Summary:

One of this century’s biggest challenges is achieving economic growth that lifts people out of poverty while dramatically reducing environmental harm. To avert major and irreversible consequences of climate change - which disproportionally hurt the world’s poorest - we must reduce greenhouse gas emissions by 80% by 2050. Technologies, businesses, and development models already exist that can address this challenge but they require trillions of dollars to scale and achieve economy-wide transformation. Established in 2014, the Global Innovation Lab for Climate Finance (the Lab) is a network of some of the world’s largest investors that identifies, develops, and launches transformative and sustainable financial solutions and businesses. In five years, the Lab has launched 35 initiatives that have mobilized $1.9 billion in sustainable investment. We want to scale this proven approach to more regions and sectors to rapidly address one of the most pressing issues of our time.

Challenge Statement

The climate is rapidly changing and approaching dangerous thresholds where impacts will be irreversible. Humankind is at risk, and especially hundreds of millions of the world’s poorest who are hardest pressed to adapt. Environmental problems like biodiversity loss threaten habitats and livelihoods. Further, inequality between the rich and poor is growing and has been a major driver for the resurgence of populism, undermining democracies around the world. At the core of these issues is the prevailing model of economic growth: A model that maximizes economic gains by exploiting resources with large consequences for society and the environment. Transforming finance, which is at the core of our economic system, is an underutilized but transformative lever for change. The financial instruments and business models that built last century’s industries are still the prevailing paradigm, and without new thinking and targeted intervention, the same outcomes can be expected. But there is a different way forward. We have seen how multidisciplinary groups of stakeholders can work together to implement new financial approaches that reward both financial and environmental returns. We are at a crucial tipping point not just for the climate but also to seize the opportunities that lie ahead. Hundreds of billions of dollars are already invested annually in sectors like wind and solar electricity generation, and jobs related to these industries are growing rapidly. This shows what is possible but, the pace of change must rapidly advance. To reduce emissions by 80% by 2050 and stabilize the climate, trillions more are needed.

Solution Overview

Our solution is to use public funds to support early-stage financial innovation, building a pipeline of investable opportunities and catalyzing billions of dollars for sustainable development. As a public-private partnership, the Lab brings together broader government and private sector efforts to scale up climate finance, helping transform economic growth. This solution is proven after four years of implementation, and has received extensive recognition, including endorsement from the governments of the G7, India, and Brazil. Over five years, we will utilize the grant to scale the Lab into the highest need regions focusing on key themes including urban infrastructure, agriculture and food, oceans, clean energy, and climate adaptation. The Lab process includes: 1. Call for Ideas - an open call for financial solutions focused on key themes needed to fulfill sustainable development goals 2. Selection – Lab members select the most promising ideas to take forward each cycle. Selection criteria are: potential to catalyze investment and achieve socioeconomic, development and environmental impacts, innovation, actionability, and financial sustainability. 3. Development – Selected ideas benefit from rigorous analysis, stress-testing and guidance from experts and investors 4. Endorsement and launch – Lab members vote to endorse and launch the ideas for piloting 5. Implementation – ideas move into action and fundraising to launch pilots, with continued support from the Lab network The Lab has supported innovations that benefit social entrepreneurs, citizens lacking access to energy, smallholder farmers, and resilient businesses seeking to scale, among others. The solution addresses a global problem with impacts to all